APD - Chancellor Expected to Hike it again

 

This Week's Mini Budget Expected to Raise APD AGAIN

Survey finds half of 26 UK airports expect passenger numbers to fall  if Air Passenger Duty raised by 2.5% 

I am old enough to remember when a post war Labour Government Chancellor, keen to increase its spending power, decided that the good voters of the UK were getting their booze and fags too cheaply.  So they whacked on a huge increase in duty for wine, beer, spirits and tobacco.  Predictably there were cries of dismay from those addicted to their alcohol and nicotine.  Also, predictably, there were those who praised the Chancellor from moral and health points of view.  Then there were those who saw an opportunity to benefit from the large increases - namely smugglers who brought contraband in from abroad. (Tho' the Gaulloise and Gitannes brands of french fags with their pungent smoke did not go down well with Brit smokers).

The result of the large duty increases was a surprise and dissappointment to one group and one person in particular - the Treasury and the Chancellor!  The result was that following the duty increases there was a massive drop in the income received by the Treasury from drink and tobacco sales.  It was a clear case of "the more you tax, the less you receive".

The survey, (see E-tid http://www.e-tid.com/airports-warn-osborne-of-eye-watering-apd-levels/68406/ ) conducted by the Airport Operators Association (AOA), found that 25% of airports believe passenger numbers will fall by more than 5% in 2013/14 as a direct result of the latest planned APD increase, with a further 25% expecting them to fall by 2%-5%.
It also revealed that 73% of airports are ‘very worried’ by the Government’s plan to increase APD, while 83% feel that ‘current levels of APD are having an impact on whether airlines choose to fly from our airport’. Every airport in the survey backed calls for a freeze in APD until the Treasury has undertaken a full review of its impact on the UK economy. ABTA also announced the results of a survey finding that two-thirs of those polled think APD is already set too high.  They also found support for and independent review.

The call for a review is also backed by airlines and the tourism industry, but so far this has been ignored by the Chancellor.  There is perhaps an apt analogy here with the Chancllore being likened  to 18th Centuty medical doctors who "bled" their patients of copious amounts of blood in the firm belief that it was best practice to help patients to recover.  This was despite the fact that there was no evidence that bleeding was beneficial.  We know now it wasn't.  Thus, until the Treasury has  research from an independent review, there is no evidence about the overall effect of APD on the UK's economy as a whole.  Interestingly ABTA's poll published today also found evidence that the Treasury is not convinced of the need for a review - how 18th Century is that!!!

The argument for a proper and independent review for the need for and the effect of very high levels of duty on flights from the UK on the UK economy is not only sensible but it is vital.  APD is a tax on one of the most important industries essential for the UK's economic recovery.   The swinging increases in APD coincided with the 2008 recession.  However since that time overall international passenger traffic has managed to recover (e.g. the 2012 Olympic effect).  This may well have masked any negative effect  because of higher levels of APD on Tresury receipts.  But that is not the whole picture...The Dutch found with their APD that there was a more profound effect on their economy as a whole.  Expected receipts from APD were in fact dwarfed by the negative effect it was having on their economy as a whole.  Sensibly they dropped the duty after one year.

One of the other effects of the Dutch APD was to encourage passengers to pop over the national borders to nearby airports to take flights which were not taxed.  In the UK some people have apparently been doing that, especially where  long haul flights are concerned.  Northern Ireland has (quietly) ditched APD.  There are strong indications that UK regions may well follow .  Wales is likely to, and one can imagine Scotland following.  The regions all want their airports to be attractive to airlines and to prosective business travellers and tourists.  A hike this week in APD will make the ability to drop APD locally because of devolution will become ever more attractive to the regions.  Announcing an independent review about the need for and effect of APD on the UK economy (not just the Chancellors duty receipts) will do much to assure aviation, business and tourism that the Chancllor is serious about helping Britain recover - not just balancing the books he inherited from the previous Government.

6.7 Million Jobs Supported by UK Aviation

 

 

 

 

 Aviation Foundation Group Issues Report

 

 

The group surprisingly consists of rivalsf British Airways and Virgin Atlantic plus Heathrow and Manchester Airports.  The report underlines the huge impact aviation has on the UK economy.  Basically three million people work in tourism related businesses whilst an additional 3.7 million work for overseas companies who presence in the UK largelyrelies on the UK's network of routes overseas.

The group published the following infograffic which gives a clear picture of the diversity of aviation's areas of influence on the UK economy.

 

 

APD gets the boot in N. Ireland -Wales likely to follow!



RIP APD ?

On 1st Jan 2013 it will be possible to fly direct long haul routes from N. Ireland without incurring the much disliked and expensive Air Passenger Duty due to new local legislation.  APD is charged on all flights leaving UK airports on a four tier scale based on the distance from London to the Capital City of the destination country.  There are two levels depending on the class of cabin - Economy and Premium  Its possible that the Welsh National Assembly will follow suit in due course when the Assembly is granted the right to determine local taxes.   This is likely after the Silk Commission  backed devolving a range of taxation powers to the Welsh National Assembly, provided Wales votes for it in a referendum.  

This underlines the fact that APD is seen by business as a tax on international trade and tourism at a time when it is obvious (that is except to certain Westminster politicians and Treasury manadrins it seems) there is a huge need to stimulate international opportunities and growth in these areas.  The need to reduce, or better still, cut entitely is something that I have personally, and on behalf of Cheapflights, been claiming since 2006!  With this latest news I am reminded of the old (Hong Kong) Chinese proverb: "If you are stuck behind a red traffic light,  you should honk your horn long and hard and the light WILL eventually turn green......!

If the Wesh do vote for the Silk Commission recommendations and APD is also eventually axed in Wales, its not difficult to see UK air passengers from the South and West of England heading up the M4 motorway for Cardiff.   Long haul flights from Cardiff rather than to Gatwick or Heathrow will cost hundreds less for families going for mid and long haul holiday destinations.    How long then before Scotland follows the Welsh and England is left alone in the UK with the regressive and anti-recovery Air Passenger Duty?

Trade War Averted? EU Aviation ETS Set Aside (pro tem)

The EU has bowed (temporarily at least) to international threats to retaliate with a trade war over the EU's unilaterateral attempt to impose its emissions carbon trading scheme (ETS) globally.  The EU intended to impose the ETS on on international airlines operating flights to and from non-EU countries at an estimated cost to aviation of 1.4 Bn Euros annually.  The Commissioner has now "stopped the clock" for one year accepting that the ICAO are working on a global version of the ETS.

Given the EU Commissioner for Climate Action Connie Hedegaard's firm resolve originally to impose this unilateral legislation, this is an (albeit temporary) u-turn. What was so incredible about the EU's stance was that the ICAO has been promoting this international solution to world aviation's carbon emissions for sometime.

 My personal view is that the EU Commissioner appears to have a somewhat evangelical attitude to the climate stemming from her long involvement in environmental campaigning in her native Denmark. Whilst she is clearly committed to addressing climate change issues, it was somewhat naieve of her to think that she could impose EU legislation internationally.   At the beginning of 2012 she was absolutely determined to go ahead with the ETS in 2013 despite international opposition from the US, Russia, China, India and Saudi Arabia.  These and other countries have made it very clear they will not submit to her dictat.  Meantime they have banned their airlines from co-operating with the EU and threatened trade retaliations.

Its clear from her move that the Eurozone's present economic problems have injected a large dose of realism into the Commissioner's thinking.  This is not surprising given the threat by China to cancel its aircaft purchases with Airbus and sabre rattling by the other major economic powers.  Why risk a trade war when there has always been an internationally supported global emissions trading scheme for aviation? 

Aviation and airlines are in an international business.  It is unfortunate therfore that the Commissioner has only stopped the clock in respect of international flights in and out of the EU.  All internal flights will still be subject to the EU ETS legislation.  This will raise the odd situation that flights into EU countries from any Non-EU European country will not be required to comply with the 2013 deadline.   Unsurprisingly given the cost implications of the ETS for airlines, calls for an across the board delay are being made to level the playing field for all airlines using EU airports, at least until the ICAO have been given a chance to ratify a global solution...

World Weather - It worth checking your destination's climate before booking dates.



 

 

Venice suffered another flooding this week-end the highest tidal high water mark since 2008.  Heavy Rain plus high tides and strong winds rather than rising sea levels or sinking Venice are to blame we are told.  We will have to wait until 2014 I believe before the currently delayed opening of a flood gate system to protect the city. 

The US East coast and the Caribbean have had hurricane Sandy and follow up storms that have left the US East Coast in chaos .  However, at least the US Mid-West states are not claiming that the hurricane is  God's punishment on the "Blue" East and North East States for voting for President Obama's re-election!  Not yet anyway!

Closer to home, I was interested to hear from a Spanish waiter friend at my local cafe that he is delighted to be in drizzly, damp Chelsea, because where he comes from in Southern Spain the weather at preseant is absolutely foul!

I recall being in Mauritius and being told by the hotel management that the residents were "very lucky" to be there to witness a cyclone.  Hopeful marketing ploy perhaps?  I would describe the event more as being "interesting" as we watched the beach disappear under tumultuous surf and paddled through the open common parts of the hotel under wind bucking brollies.  Mauritius is a long way to go to experience something one can usually "enjoy" back home quite regularly.

Well I guess the point of these wanderings is to commend would be tourists to always check out independent weather overviews of the climate in any destination you are considereing visiting.  Don't rely on travel agents' brochures - do a little bit of online checking about local weather at the time of year you are planning to go before committing hard earned holiday funds to somewhere just because the beach or country looks great in the brochure.    Also just because a beach destination is in a region that you have always believed to be hot have a look at sea temperature charts  - The UK Met Office have a good one on :
http://www.metoffice.gov.uk/research/monitoring/climate/surface-temperature/oceans-and-seas
Dubai and Taba have cold water in the winter months which came as a complete surprise to me when I tried out a dip.  A hot beach and sand does not always equate to warm sea water! Other water temp. sources are often found on Scuba Diving sites.

I was however expecting cold water when I went to stay in Cape Town. If you check out pics for famous C.T. beaches like Llandudno you will see that invariably whilst the beach is crowded the water isn't!    When asking where they swam in Cape Town......  Oh! they said "Warmer Water?" just go round the to Muizenberg on the other side of the "False Cape".  It's more protected there from the Atlantic.  Well I would have had to have gone several hundred miles up the East coast towards Plettenburg before anything like warmish water occured to tempt my toes.  Cape Town is a great place to visit but not for a traditional beach holiday.  By the way when we got to Muizenberg  beach, the beautiful silver beach sand was flying horizontally off the beach and covering the coastal road and car parks - I joked that if we had left the hire car there for a couple of hours it would have been sand-blasted back to the metal!

Muizenberg Beach (©South African Tourism )

Its definitely worth researching your proposed destination yourself rather than relying on adverts and brochures.   Check the seasonal weather patterns and water As they say in the Army, "Time in reconaissance is seldom wasted"!

PS Apologies for being "Off Air" since mid Oct...

Heathrow Pollution Report

 

 

 

HEATROW POLLUTION REPORT BY MIT

 "He Who Pays The Piper Calls the Tune"

Climate and the environment are major concerns. How the perceived threats to both are approached do have significant ramifications for us all. If you have concerns about global warming you should read Michael Crighton's novel "State of Fear".  See http://en.wikipedia.org/wiki/State_of_Fear.   Particularly so if you have read the most recent news that there is evidence that the climate has been in a period of cooling for the past decade or more.  The book demonstrates how industry, politicians and partisan groups on either side of the global warming argument tend to support their interests with selective stats or with scientific studies which they have commissioned.

Predictably in 2004 at the height of the global warming scare when the book was written, many climate change advocates criticised the science in the book. This was despite the fact that the author used a multitude of published papers on the subject from the scientific community. To his credit the author does not come down one side of the global warming debate or the other but leaves conclusions to his readers. He does suggest though that so called independent studies commissioned by third parties tend to obtain conclusions slewed to reflect their sponsors' interests.

The current Government review by Sir Howard Davies on the need for more runway capacity in the South East to meet the commercial challenges of the 21st Century, has until 2015 to publish its findings. Meantime proponents of a third Heathrow runway and other proposed solutions, most notably Mayor Boris Johnson's Thames Estuary project, continue to add more "evidence" to the review process. The most recent offering is that "Premature deaths from Heathrow pollution would treble by 2030if a third runway is built". This is according to an academic study published by the Massachusetts Institute of Technology laboratory for aviation and the environment. Viz: a report on the air quality impacts of UK airport capacity expansion.

The key findings from the study are:
 
UK airport emissions today cause about 110 early deaths per year, of which 50 are due to Heathrow.

                        ·By 2030, this figure will increase by 170% even without airport capacity expansion.

                        ·An expanded Heathrow would cause 150 early deaths per year in 2030.

        ·In comparison, a new Thames Estuary hub airport (to replace Heathrow) would cause 60-70% fewer early deaths due to the location of the airport with respect to the population and the prevailing wind direction.

 
The fact that the report claims that if Heathrow operations were replaced with a new hub in the Thames estuary it would significantly reduce the number of deaths concerns me slightly. It seems a very convenient and timely contribution to the debate about the accepted need to provide the South East, and London in particular, with increased runway capacity. But - its "scare tactics" approach seems very similar to the Government's 2006 Stern Review on climate change. The dire environmental predictions of this report helped the Government to introduce swingeing increases in Air Passenger duty by presenting the tax to voters as a necessary environmental one. Such was the concerns at the time that the Bishop of London infamously stated: “It is a Sin to Fly!” In fact the Government later admitted that APD was actually a revenue raising tax to address the UK's enormous deficit and had nothing to do with the environment.

Unlike the Stern Review I do not have any reason to doubt the conclusions of the MIT report just published. However, like Michael Crighton I do have a view on the timing and the incidental support for the Thames Estuary solution. After all there are other solutions being put forward besides Boris Island - the reference to that location alone seems more than coincidental at this time.

 

Plane Quiet Zones Backed in Travelmole Poll

Travelmole the internet travel news site often has simple "Yes" or "No" click on polls about travel news and issues.  Their poll on Air Asia's move to create quiet zones came down heavily in support of the idea.

Mole Poll

' AirAsia X gives kids the boot - Under 12s banned from 'quiet' zone' Good idea ?
YES 85.65 %
NO 14.35 %

 

I cross the Atlantic once - sometimes twice - a year.  If possible I always travel Premium Economy (despite business rate APD being applied to my tickets).  I normally travel before Christmas or Easter and naturally the flights do have a large proportion of families travelling for the holiday breaks.   What I have noticed  is that the business class cabin has a very high number of (obviously) wealthy young familes travelling, often with two or three small children.  A much higher proportion compared with further back in the 'plane.  Therefore it's often the case that there is a fair bit of noise in business class compared to the "Cheap Seats" in the rear of the aircraft.

Whether its the fact that many yummy mummies normally don't  have to deal with their kids when at home and their nanny is travelling with the family back in coach class, I don't know.   But I do know that there is generally much more kid's noise coming from the front cabin than in Premium Economy.   Some families are OK of course! So I guess the answer is to invest in a pair of really expensive and effective noise reduction earphones and avoid being considered an antisocial (old!) reactionary for asking the parents to deal with their kids anti-social behaviour.